Contractual Limits Can Supersede Statutes of Limitations, Kirkland and Cascio Explain

Shook Associates Aaron Kirkland and Jennifer Cascio have co-authored a Law360 article exploring contractual provisions that set the amount of time a party can sue as less than the period dictated by statutes of limitations. Kirkland and Cascio summarize recent decisions holding that these limitation-of-action provisions can be enforced and argue that including these provisions and seeking to enforce them where permissible can be a cost-effective approach to managing litigation that provides additional predictability and business efficiency. They further explain that some states have enacted laws directly addressing these contractual provisions—such as Texas and Arizona's laws, which dictate the minimum length of time a contractual limitation can be—while other jurisdictions have prohibited the enforcement of any such provision.

Because states take a range of approaches to these limitation-of-action provisions, Kirkland and Cascio emphasize the importance of proper construction in drafting the provisions to meet a variety of state requirements. They recommend ensuring that the provision is conspicuous by setting the language apart from other text as well as including "language above the signature line that specifically directs the signatory’s attention to the limitation of action provision, such as 'Attention is directed to the terms and conditions, specifically paragraphs X and Y.'" In addition, "language such as 'within the shortest limit of time permitted by the laws' or 'the shortest duration permitted under applicable law if such period is greater than 'X' year(s)'" can help to ensure that the provision complies with state laws governing the minimum amount of time allowed.